Obamacare Enrollments Are Well Below HHS Estimates -- And That's OK

Four months in and the locomotive known as Obamacare is beginning to pick up speed.

The transformative health law that opened to the public on a state and federal level in October, and formally took effect at the beginning of 2014, saw enrollments surge by 53% (link opens PDF) between Dec. 29 and Feb. 1, with 1,146,071 people fully signing up for health insurance.

The Department of Health and Human Services released figures showing total enrollments since Oct. 1 now stand at 3,299,492. It's a far cry from the 364,682 people who were fully enrolled at the end of November and speaks to the night-and-day difference created by the tech surge that fixed the federally managed Healthcare.gov insurance marketplace.

Source: Centers for Medicare & Medicaid Services.

Missing the mark Ultimately, many will view these figures as disappointing. While enrollment has surged by nearly 3 million over the past two months, the current pace would place enrollments at an estimated 6.3 million by the coverage cutoff for 2014 of March 31. By comparison, HHS had targeted an enrollment figure of 7 million.

Furthermore, our first demographic breakdown last month showed that just 24% of all paying enrollees were between the ages of 18 and 34, the age range that is viewed as crucial to success of the Affordable Care Act effort. You see, people in this age range are often healthy and require little medical care, so their premiums are needed to help offset the costs of treating terminally ill and elderly patients who make up the bulk of health care spending in this country.

Obamacare enrollments are weak -- and that's OK While the numbers are certainly lower than the HHS would like, they're also not nearly as dire as many pessimists might believe.

I've said it many times before and I'll say it again, the only Obamacare deadline that really matters is the March 31 coverage cutoff date. As we've looked at recently, Obamacare is viewed unfavorably in a majority of polls, so it wouldn't be surprising if those who don't particularly care for the law, but also who don't want to violate the individual mandate, wait until the last possible moment to sign up late next month.

In addition, we have to consider that health insurance premiums are nothing more than a bill to most people -- very few of us actually prepay our bills, and we often wait until the last possible moment to pay when we can. If we use the Massachusetts health care reform as our example, just 6% of total enrollees signed up in the first two months, with the remaining 94% coming in the nine following months in 2006. The same rules apply here: People are waiting as long as possible to not owe an insurance premium without violating the individual mandate, which will levy a penalty that is the greater of $95 or 1% of annual income in 2014.

Another positive here is that a higher percentage of young adults between the ages of 18 and 34 who signed up in January. According to statistics from the Centers for Medicare & Medicaid Services, young adult enrollment accounted for 27% of the 1.146 million sign-ups, compared to just 24% of the previous 2.153 million enrollees in the preceding three-month period.

Source: Centers for Medicare & Medicaid Services.

While no specifics were cited for this jump, I'd propose that improved education on the law, as well as the looming March 31 deadline, is pushing uninsured young adults to sign up.

Finally, we should also note that insurers are seeing a nice blend of enrollments based on package level. Since the last HHS report, silver and bronze enrollments have crept up slightly to 81% of total sign-ups, compared to 80%, while gold and platinum plans selected have dipped by 1% to 19%. The thinking here is a bit counterintuitive in that you might assume higher-priced plans are better for insurers. The reverse may actually be true, however, since lower-premium bronze and silver plans require more out-of-pocket money from plan members during initial visits and for early medical care. Unless each bronze or silver plan member uses up their entire max out-of-pocket costs for the year, these lower-tier plans are actually more profitable for insurers.

Nothing is perfectThe data isn't abysmal by any means despite being more than 1 million enrollees off the HHS projected path to 7 million, but I also don't want to give up the impression that everything is perfect, either.

In particular, young adult enrollment will need to pick up steam considerably over the coming two months; otherwise, insurers could be forced to rely on the Affordable Care Act reinsurance fund to help reimburse hefty Obamacare-plan losses. Earlier this month, Aetna (NYSE: AET) CEO Mark Bertolini told CNBC's Squawk Box that just one in nine Obamacare enrollees were genuinely uninsured prior to the program's implementation. The majority, as Bertolini noted, are simply moving from employer-based insurance platforms to Obamacare in order to receive bigger subsidies. Without younger adults offsetting this effect, Bertolini suggested that a 15% hike in premiums wouldn't be out of the question.

Another concern is the number of enrollees who are receiving federal assistance. One of the largest unintended consequences of Obamacare is the fact that citizens are doing exactly what Bertolini described -- jumping off insurance plans that require higher out-of-pocket expenses and diving into Obamacare health plans that provide a bigger subsidy. If you recall, those subsidies extend up to 400% of the poverty level, offering a good chunk of Americans the opportunity to get at least some form of subsidy. While certainly reducing the number of uninsured, this subsidy could push premiums higher if a sufficient number of young adults and non-financially assisted members don't sign up. Through Feb. 1, a whopping 82% of enrollees were eligible for some form of financial assistance.

Hitting the home stretchYou might say that we're starting to hit the home stretch when it comes to Obamacare, at least for 2014.

Based on what I've seen thus far it could be a banner year for Medicaid-based insurers such as Molina Healthcare (NYSE: MOH) , which should be adding members hand over fist in California. As long as Molina can keep its internal costs under control, it could be a surprisingly strong year.

It could also be a strong year for private-market insurer eHealth (NASDAQ: EHTH) , which has seen membership soar, as many individuals want to avoid the individual mandate penalty but want nothing to do with the government's marketplace, Healthcare.gov. eHealth's platform gives consumers a similar path to select their insurance plan. I'd personally guesstimate that eHealth's membership could rise another 20%-25% in 2014.

National insurers, though, may be on the outside looking in. The latest earnings report from Cigna (NYSE: CI) wasn't encouraging in the least, with the company providing full-year earnings-per-share guidance that was modestly below the Street's expectations on higher medical costs and increasing Medicare Advantage competition. As government reimbursements for Medicare are expected to fall, national insurers could find themselves more reliant on young adult enrollment for growth; and thus far those figures aren't working in big insurers' favor.

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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Comments from our Foolish Readers

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These young people that Obama must sign up are not that stupid. The choice of paying ~$100 fine for the first few years or pay ~$400 a month insurance premiums for health care they rarely need or use is a no brainer. They are mostly young health and have a very low chance of needing medical care. When the fines get higher than the price of the policy is when they will really squeal. There is no more sensitive nerve that goes from the brain to the wallet. The actual number of young, healthy with good jobs that have signed up that would be paying $300-$400 a month in premiums has been less than 1,000.

No, what it shows is rhat even the poorest Americans know how dangerous and destructive this idiot conceived and dolt passed atrocety is I have already had a run in with Obma surance and whait it dosent pay in fact it paid literally nothing on my annual visit to both my GP and My cardiologist both necessary to renew prescriptions for needed medications I work full time and make less than 30000 a year last year on my Obama approved insurance the deductible because they WONT pay for tests the Doctors need to renew my prescriptions and disallowed tests don't seem to satisfy deductible requirements

What is hoop-la about three million people signing up for Obamacare? Six million people who had health insurance lost their healthcare insurance due to Obamacare. A lot of those 3 million enrollees are those that lost their health insurance signing up for Obamacare because they have no where else to go. The Obama Administration still has stated how many of those enrollees have paid their bills in advance instead of just placing there sign up in the shopping cart. I large portion are Medicaid enrollees that the tax payer pays for fully.

It really doesn't matter, now does it? There will continue to be "extensions", back-door "deals", and ineptitude exhibited, all at the expense of the middle-class pocketbook and health-care. The hardest part, for me, is how the American people can continue to believe that the same people who came up with this scam are still going to be their best bet for competent health care! I truly feel sorry for those that will feel the brunt of this near-criminal program.

It's a failure all your cheerleading isn't going to change that. And they dropped over 6 million people from their perfectly fine insurance plans and have replaced 3 million? obama should be brought up on charges.

When asked about "cooking the book on the numbers on OB☭M☭C☭RE ●,Kathleen smiled and replied, "Pull my finger." When Barry was asked the same question, Barry smiled and said, "I just love that Yahoo picture of me with the Great Seal behind my pointy head, that looks like a halo on me. In addition I just want you to know, "I have a Bic Pen and an Obamaphone."

Actually, the Republicans are now just waiting for Barry & Company to work the kinks out of his legacy legislation OB☭M☭C☭RE●! After all this isn't just more of your Dear Leader's shuck and jive stuff, this is about millions of people's lives. The Republicans promised to get right on immigration, as soon as OB☭M☭C☭RE● smoothes out with the millions of lives it has disrupted. Barry was quoted as saying," When I go out and say the, "You like it you can keep it's... for years and still just as recently as the SOTU, constantly fudge my numbers and get 4 Pnocchios from the Washington Post the next day for it, I JUST CAN NOT UNDERSTAND WHY "YOU PEOPLE" STILL DON'T BELIEVE MY SHUCK & JIVE ANYMORE? I know you're all struggling and I want you to just think back about Christmas. It cost you tax paying suckas' $800,000 to bring my main squeeze "Snuff Lip" back from her extended stay in Hawaii. Now, for the millennials: "Welcome to YOUR OB☭M☭C☭RE●! The Liberals, that now have to survive re-election with this albatross hanging around their socialist necks, STILL have to convince you soft headed millennials into another suicide vote for them again. Maybe we, Barry & Company, can just chat up Pot Legalization, minimum wage increase, and Income Inequality, while carefully avoiding your slim to none chances at even getting a job. We Dems are still just going to encourage you boneheads into believing that the lying Dems are actually going to make your lives so much better."

OB☭M☭C☭RE ● NOW has DEATH SPIRAL written all over it. I do hope the Republicans are meeting with Insurance Companies, as I write, figuring out how to defuse this Economic time bomb, when they regain the Senate in 2014 with their new plan.

I've been seeing a disturbing trend with Fool. I see Fool as starting to become water carriers for the Obama administration. Some of the enviro picks for example. Why would Fool try to paint the lips of the pig so red when Obama will not even release the number of people that have actually paid?

Till those numbers are released I fail to see how you can point out anything positive about this fiasco! Why have I taken that position? Because if the premiums were there they would be screaming how much they have taken in instead of doing everything they can to conceal that information.

Why is MF letting the cheerleaders of Obamacare write misleading articles which are really just propaganda. 90% is trying to convince everyone how great Obamacare is and 10% talking about possible investments. Did you notice the statement that many are leaving insurance they had to get Government subsidy. It is sad commentary that so called Capitalist are encouraging people to get on the Govt. dole.

"I've said it many times before and I'll say it again, the only Obamacare deadline that really matters is the March 31 coverage cutoff date." We will all remember you said that, just make sure you don't forget that you said that! March 31st is just seven and a half weeks away. What will your excuse be when only another 500,000 or so have signed up by the deadline? I can hardly wait!

I 'd really like to know the NET increase or decrease in those with health insurance now, due to ObamaCare. That would be those newly insured who have enrolled in ObamaCare + Those newly insured enrolled in Expanded Medicaid - Everyone who lost their insurance. You know, the MEANINGFUL bottom line data.

This was not a news article or even an editorial comment. This was the MF advertising Obamacare in just as deceptive a manner as the liberal dolts who conceived the HSA and have attempted to shove it down all of Americans' throats. The liberals, and now MF too, have greased their sales pitches only with lies, lies and more lies about how great Obamacare is, even in the face of sheer, obvious unaffordability and the sometimes devastating effects it has already had on those whose insurance it caused to be cancelled. Disappointing cheerleading, MF.

"Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above."

Yet, any article about Obamacare attracts comments that read more like the worst of a Yahoo comments section or even worse.

These comments certainly don't help anyone decide how to invest; the article at least mentions several companies that should do better and ones that should do worse (from an investing standpoint) under the new law.

Nor do the comments offer any specific criticisms of the law or any specific proposals for a more cost effective health care system than Obamacare or the system we had before.

If anyone has thoughtful criticisms of the article's claims, facts and data to refute its statements, or any insights based on observations (not just a few anecdotes); I'd like to read them.

If I want comments like most of the ones above, I can click on the screaming heads on cable.

For the record, I have concerns about some aspects of Obamacare, and I wish that the opposition debate before it passed had not been dominated by voices making spurious claims, but had included more rational analysis instead.

The primary purpose of the law was to extend benefits (and make the payments affordable) to everyone that didn't have them. How could not meeting that objective be "ok"? And the objective will not be met by the deadline either. It will take years to make it work out.

"Nothing is perfect" is the perfect way to describe a imperfect law to begin with and rammed down our throats by one party.

@KayakerRW: FYI. This is a free country (for now) that also has a Constitution and First Amendment that protects free speech. People are allowed to comment. If you want real data go the WSJ.

@KayakerRW: the problem with the pro-ACA articles and supporters is that they have to really dig down into the mud to try to prop it up w/ bogus data in most cases. As you can see from the comments most people do not like the law, do not support the law, do not like articles that support the law written, and are venting their anger. The MF has the right to take a side in the debate and write articles that support it but the commentators have the same right to bash it. That's what makes this a great country.

The Fool is really a fool. No brains here. First off, there were more people who signed up in Dec. then in Jan. so the enrollment figures are going down not up, secondly just because they have enrolled does not mean that they have coverage. There are no actually figures who actually paid into the system yet. The fact is as of yesterday the gateway to pay into the system has not been completed yet. There are reports that anywhere from 20% to as much as 50% of all those enrolled have not paind their premiums as of yet, mainly they saw the con game , the high premiums and or deductibles and just left it at the store. Plus the figures given is well short of any goal and as of right now more people have lost their coverage due to Obamacare then actually enrolled into it, that figure is at a 2 to 1 ration at best.

In conclusion, Obamacare is a disaster which needs to repealed and replaced. The Democrats will lose the Senate and lose more seat in the House because of it. Even Debbie Wasserman Schultz here in South Florida is now in trouble of losing her seat because of it.

“As you can see from the comments most people do not like the law, do not support the law, do not like articles that support the law written, and are venting their anger.”

The comments show that anywhere from 15 – 30 people don’t like the law. Typically, people are more likely to express disagreement than agreement, especially online. I am aware that many people don't like or support the law, but that doesn't help any of us evaluate the law or its effect on investing or our country.

I knew plenty of people who didn't like the Internet or giving out their credit card number online back in the 1990's. (Most of them don't like Obamacare now). But there dislike of the Internet didn't stop me from using Ebay or Amazon or from investing in Amazon. [Note: in no way do I think Obamacare is like Amazon; but it's important to note that just because lots of people don't like something, it doesn't prove that it's a bad idea; nor does popularity make it a good idea]

I recognize that most of the posters are simply venting, but I still wonder why at least some don’t take the time to include something of substance as well.

“Pro-ACA articles and supporters . . . have to really dig down into the mud to try to prop it up w/ bogus data”

If the data is bogus, why not respond with legitimate data and analysis? When a MF writer posts on any other topic (even some perceived as liberal vs. conservative), at least a few responders provide data and analysis to refute the article, but with Obamacare, it’s almost all venting.

Some thirty (plus) years ago I left high school with the intent of securing a job that offered benefits such as insurance, vacation, sick leave , and so on.

After much effort, by age 19 I had and fortunately so as medical bills exceeded 30K one year (about thirty years ago). Also, while leaving the work force to attend college in pursuit of an advanced degree I continued to have some form of insurance to cover any financial liability use of the healthcare system may incur. I remain insured to this day.

It seems the we expect our health care to be the best available, readily accessible, and at least to some - free. However, it isn't and can't be free. The education of Doctors, nurses, and all the allied health care professionals is expensive and yes they would like to earn a salary commensurate with the time and effort in acquiring those degrees.

Health care will never be free. Someone will always have to pay the bills for both the insured and uninsured. Insurance companies cannot "cherry pick" only the healthy for enrollment but take those with prior conditions as well.

Anything that comes out of the Centers for Medicare and Medicaid Services (which is the organization that actually runs ACA) is suspect. Any data can be manipulated to fit their needs. And of the approx. 20 commenters you and maybe one other are the only ones supporting ACA (thats a 10% rate -- not very impressive).

The venting is because the majority of Americans (probably reflected by the majority of the comments here) do not like the law, do not support it, and do not like the fact it was rammed down their throats by one party in Congress (remember it got zero GOP votes) -- that is not a democracy. The president should have realized this in 2009 and worked to make the law more appealing to at least some of the GOP, but refused to do that because of his arrogance.

Another thing, I do not need to know how much the elephant weighed exactly (i.e. data). I need to know where it will land so it doesn't fall on me.

So in summary, the comments in here probably reflect the population as a whole who do not agree with the author (and maybe the MF in general) and his selection of the data chosen to be included in the piece.